Despite fears of a spike in rents following the introduction of the Renters’ Rights Act, the latest data shows the rental market is continuing to cool after the exceptional rent inflation over the past two years.
According to the Office for National Statistics (ONS), average private rents in the UK increased by 3.3% in the year to June, unchanged from May. That’s compared to a peak of 9.1% in March 2024, with annual rental inflation at its lowest level for more than three years. Average monthly rents are now £1,388, £44 higher than a year ago.
Feared spike in rents has yet to materialise
The figures are among the first to cover the period since the Renters’ Rights Act came into force on 1 May and show the feared spike in rents has yet to materialise, although it remains too early to assess the longer-term impact of the reforms.
It is not a uniform picture, though. Wales recorded the strongest annual rental growth of the UK nations at 4.9%, followed by England at 3.4%. Scotland, however, recorded the lowest increase at 1.3%, and Northern Ireland recorded annual growth of 2.9%.
There are also wide variations in England’s regions. The North East posted the strongest rental growth at 6.3%, followed by the North West and Yorkshire and the Humber. London had the smallest annual increase at 2.2%, although it still has the highest rents in the country at £2,302 a month.
Regional variations
Those regional variations are evident on a more local level, too. Kirklees recorded the UK’s fastest annual rental growth at 12.9%, while Waverley’s rents recorded the largest fall, which were down 3.7% over the year.
In many of the country’s buy-to-let hotspots, rental growth outpaced the national average. Annual rents increased by 5.9% in Liverpool and 3.5% in Manchester, and Leeds, Birmingham and Nottingham all recorded growth of around 3%.
The data also reveals that property size is another important influence on rental values. The average monthly rent for a one-bedroom property reached £1,127, compared with £2,061 for homes with four or more bedrooms.
Rent controls
Commenting on the figures, Chris Norris, Chief Policy Officer at the National Residential Landlords Association, said: “At a time when there is growing speculation about the introduction of rent controls, today’s figures show that rent increases continue to slow significantly.
“The annual rate of rental growth has fallen by almost two thirds since the current Housing Secretary warned that rent controls would hurt tenants. At the same time, average earnings continue to grow faster than rents.
Reduced supply
“As the reappointed Housing Minister has recognised, the evidence from the UK and overseas is clear: rent controls reduce the supply of homes to rent and ultimately leave tenants worse off. It would further undermine the Government’s welcome mission to end rough sleeping as access to the sector became harder for those who most need it.”
Whether the current cooling trend continues may depend on how landlords respond to the reforms over the coming months. If significant numbers decide to leave the sector, reduced supply is likely to place renewed upward pressure on rents.
